MReport June 2017

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THE LATEST
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U.S. Jobs Up, But Construction
Employment Flounders
Industry experts call the growth a "disappointment."
T
he April employment
report from the Bureau
of Labor Statistics
showed strong overall
growth, with a total increase in
non-farm payroll jobs of 211,000,
compared to March's increase of
79,000. Department of Labor Sec
-
retary Alexander Acosta tweeted
that the report was "great news,"
and noted the unemployment
drop to 4.4 percent.
Despite the overall optimism,
the housing and construction em
-
ployment numbers didn't see quite
this level of growth, and the 5,000
new jobs created in this sector
were called a "disappointment" by
First American Chief Economist
Mark Fleming. Fleming noted
that this growth is a 2.6 percent
increase from a year ago.
"Home builders are report
-
ing that the lack of construction
workers is hampering their ability
to increase production, which is a
desperately needed source of sup
-
ply, as most markets already have
very tight inventories of homes for
sale," Fleming said. "In fact, we
have been underbuilding residen-
tial housing relative to demand
since 2009."
Realtor.com Senior Economist
Joseph Kirchner voiced a similar
concern, stating his disappoint
-
ment in April's numbers. The
5,000 construction jobs that were
added are just "a fraction of what
we need," Kirchner said, "and it
won't solve the inventory prob
-
lems that stop consumers from
finding homes to buy."
Not all is lost though. The over-
all employment rate is still high,
and unemployment is dropping.
Fannie Mae Chief Economist Doug
Duncan noted that the U6 rate,
the broadest measure of labor un
-
derutilization, fell to its lowest rate
since November 2007. To Duncan,
these are positives that send a clear
message.
"The labor market is tight, with
continued declines in discouraged
workers and part-timers who pre
-
fer full-time jobs," Duncan said.
"The report is consistent with a
faster pace of monetary policy
normalization this year and sup
-
ports our expectation of two rate
hikes in June and September and
a change in the Fed's reinvestment
policy in December."
Confidence in Housing Market Plateaus
A survey shows that homebuyers are a little less confident
in the market, as interest rates continue to rise.
A
mericans remained as
confident in the U.S.
housing market as
they have been, but
this cautious optimism may be
on shaky ground. That, at least, is
the conclusion of ValueInsured's
quarterly Modern Homebuyer
Survey, released in April.
The survey index ended Q1 at
67.7 out of 100, which was down
less than 1 percentage point from
Q 4. According to the index,
the so-called Trump bump "has
plateaued after two interest rate
increases in three months."
While Americans were gener
-
ally confident in the market,
only about half—48 percent—said
they believe the housing market
will be more favorable with the
Trump administration. That's
down from 52 percent who said
so in January.
At the same time, while 63
percent of Americans said they
are hopeful that 2017 will be a
better year for housing than 2016,
69 percent said so in January.
Most guarded feelings stemmed
from prospective first-time and
upgrade homebuyers, who said
they sense growing risk regarding
rising home prices and interest
rates. Tellingly, three-fifths of
interested homebuyers said six
months ago was a better time to
buy a home and that six months
from now will be worse. Sixty-
five percent said they expect
more interest rate increases this
year, and 61 percent say "the era
of affordable mortgages is coming
to an end," the report showed.
Similar doubts nag millennial
first-time homebuyers, 54 percent
of whom said they're not confident
if they were to buy a home this
year that it would be worth more
next year. That compares to 48
percent of all others who said the
same and is an increase of 13 per
-
cent points in just three months.
Similarly, two-thirds of
millennial first-time buyers said
last year would have been a bet-
ter year to buy, and that number
slipped 6 percent toward doubt.
"It's natural for buyers to be
anxious," ValueInsured CEO
Joe Melendez said. "As prices
rise, buyers are seeking ways to
protect themselves."
Still, the basic tenets of home
-
ownership were largely valuable
to survey respondents. According
to ValueInsured, nearly 80 per-
cent of those surveyed said they
believe buying a home is more
financially beneficial than renting,
that they would like to buy a
home, and that owning home
is an important part of their
American Dream. Those percent
-
ages were largely consistent with
January's survey.